Consider an n firm homogeneous-good oligopoly with constant marginal cost, the same for all firms. Let ¯δ be the minimum value of the discount factor such that it is possible to sustain monopoly prices in a collusive agreement. Show that ¯δ is increasing in n. Interpret the result.

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When there are n firms in the market all having a marginal cost m and a demand function P a bQ wher... View the full answer